Ownership Structure of Business Entities
Who owns a Business Entity?
Written by Jason Gordon
Updated at May 31st, 2021
- Marketing, Advertising, Sales & PR
- Accounting, Taxation, and Reporting
- Professionalism & Career Development
-
Law, Transactions, & Risk Management
Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
- Business Management & Operations
- Economics, Finance, & Analytics
- Courses
What is the ownership structure for a business entity?
Ownership structure concerns the internal organization of a business entity and the rights and duties of the individuals holding a legal or equitable interest in that business. As owner of the business entity, it is important to understand how the ownership structure of a particular business entity is organized and what that means for the owners rights.
- Example: A shareholder, as owner of a corporation, has certain rights. These rights are distinct from those of members of a limited liability company. Further, within the corporation, a holder of preferred stock may have different rights than the holder of common stock.
Visit the following articles for more information on ownership structure:
- A Detailed Explanation of the Sole Proprietorship
- A Detailed Explanation of the General Partnership
- A Detailed Explanation of the Limited Liability Company
- A Detailed Explanation of the Corporation
- A Detailed Explanation of the Non-Profit Entity
Next Article: Control Within Business the Entity Back to: BUSINESS ENTITIES
Discussion Question
Why do you think different types of business entity allow for unique ownership structures? Why do you think ownership structure is so important for business owners?
Practice Question
Can you think of any situation where ownership of the business entity became an issue between the founders or co-owners of the businesses? What was the basis of the dispute and what was the outcome?
- A good example is the dispute over ownership interest in Facebook, Inc., by the Winklevoss brothers. The genesis of the dispute is that their interest in the business was not compensated when they left the business early in its existence.